7 Quick Steps to Calculate Pay for Performance Increases
Pay for Performance is all the rage with politicians. Many government sector compensation analysts are being counted on to calculate merit increases properly. Pay for Performance is also known as merit pay. Many organizations are building brand new pay for performance models based upon what their state is requiring. This post is not about the ramifications of pay for performance, but rather about calculating pay for performance in a systematic format. Plug for Gaus Systems, use our web-based compensation engine and it automatically calculates merit pay increases by the employee! Here is a quick way to calculate merit pay increases. This is a quick way to handle merit pay increases, but expanding upon these formulas could prove useful to your organization.
Steps to Calculate Pay for Performance Increases
- List of employees
- List of unique employee identifiers
- List of merit indicators per employee
- List of merit pay categories
- List of merit pay increases by category
- Sumif formula
- Knowledge of writing multi-layered IF formulas
Step 1–3: Pay for Performance | List of Employees | ID | Merit Indicators
Step 4–5: Merit Pay | Pay categories | Pay increase by category
Step 6: Merit Pay | Sumif
This step allows us to sum the total current year salaries for each merit grouping.
Sumif, is stating to sum all employee salaries that have a Merit Code of “HE” and return the total. =sumif(Performance Indicator, is “HE”, sum just those salaries)
Step 7: Merit Pay | IF formula to increase each employee
The if formula allows you to write a multi-layered IF formula to take the highly effective rating and increase each employee and then repeat the if formula for each additional merit category. You could also use a vlookup on the employee data to return the merit increase % indicator. Here is what your employees should look like after merit pay increases are given.
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